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Finance Bill 2017 – what now?

Finance Bill 2017 – what now?

Highlights

Also on KPMG.com

On 18 April, Prime Minister Theresa May called for a snap general election to be held on 8 June 2017, a move which has now received approval from the vast majority of MPs. With the UK’s politicians now hitting the campaign trail, what will become of the longest Finance Bill in the UK’s history? Well, we already have some idea - Parliament have released some revised dates for the various stages of the Bill that remain to be completed before it can be passed. The Committee Stage, Report Stage, and Third Reading in the House of Commons are to take place on 25 April, with the journey through the House of Lords and Royal Assent expected to be completed by the last sitting day of this Parliament – Tuesday 2 May.

But what does this mean for Parliamentary scrutiny of the Bill? Only a few weeks ago did we see the publication of letters on tax policy making between Treasury Committee Chair Andrew Tyrie and Jane Ellison, Financial Secretary to the Treasury, with Tyrie stating that more needed to be done to scrutinise tax policy, including giving the Finance Bill Committee the opportunity to hear directly from tax experts before considering the Bill. Whatever the Government’s plans to respond to this recommendation, there is no time to implement it for Finance Bill 2017.

Tyrie has nonetheless continued to press the Government on this even after the election announcement, calling upon them to remove some of the complex measures in the Bill, such as those relating to Making Tax Digital, to ensure that the implementation of these measures is not rushed. In response, the Chancellor has confirmed that they will negotiate with Labour on the Bills currently before Parliament, including the Finance Bill, to pass them in “whatever form is appropriate”. In the past these negotiations have resulted in some of the more politically controversial measures being removed from the Finance Bill. We shall see what legislation remains after these discussions on Tuesday 25 April after which no further amendments are possible to the Finance Bill.

Ahead of the election, the Government will also enter a state of ‘purdah’ where it is prohibited from announcing major new policy initiatives. Purdah for the general election starts on 22 April, and will last until after the election. We will therefore expect very few tax-related announcements from the Government and HMRC in the coming weeks.

But what about tax policy post-election? We have already seen this year the consequences of a 2015 Conservative manifesto pledge not to raise the rates of VAT, income tax, or National Insurance, which provided an unfortunate pitfall in Chancellor Phillip Hammond’s first Budget in March when he announced, and then scrapped, plans to raise Class 4 NICs. Given the changes in the UK’s tax and economic environment since then, could the Conservatives take this opportunity to remove the ‘triple lock’ from their manifesto? And what will the other political parties propose for the UK tax system? Labour have already suggested that they would increase taxes on the rich and on big business. Only time will tell – we await the publication of the party manifestos for more information.